Individuals will be able to legally copy music and DVDS they own on to digital
devices such as iPods and computers, under sweeping changes Britain's "archaic"
copyright laws.

Ministers unveil proposals to what they say are outdated laws that penalise millions of people who unknowingly copy music for personal use.

The move will clear the way for companies such as Google and Amazon to develop online content storage systems for UK consumers.

It will also allow them to create backup files of their music and film libraries in a ''cloud'' on the internet, so they can be retrieved even if their own computer or MP3 player is stolen or lost.

The government hopes the changes, to be announced by Vince Cable, the Business Secretary, will open the door to new services for film and music fans and boost the economy by billions of pounds.

In a speech at the British Library, in central London on Wednesday, Mr Cable will announce the Government's response to 10 recommendations on intellectual property following a review by Prof Ian Hargreaves.

The professor of digital economy at Cardiff School of Journalism, found that Britain's 300-year-old copyright laws were obstructing innovation and growth and a shake-up could add up to £7.9 billion to the economy.

His review of Britain's intellectual property framework was undertaken at the request of David Cameron, the Prime Minister.

Unlike most countries, Britain's current intellectual property laws makes it technically illegal to transfer content from CDs or DVDs on to a different format, such as an MP3 file on a computer.

Mr Cable is expected to say that he will legislate to sweep away current restrictions, making it legal for consumers to build up personal libraries of music, videos and films on their home computers and transfer them on to devices such as iPods.

He will signal the government will agree to Prof Hargreaves' recommendation to legalise private copying or "format shifting" of legitimately-purchased copyright works

Mr Cable will argue that millions of people undertake such practices without being aware that they are technically breaking the law.

The Business Secretary said before his speech: ''We are determined to explore how exceptions to copyright can benefit the UK economy and support growth.

"Private copying is carried out by millions of people and many are astonished that it is illegal in this country.

"We need to bring copyright into line with people's expectations and update it for the modern digital world."

He added: This will free up innovative British businesses to develop new consumer technology and help boost economic growth."

The reforms are also expected to make it legal for individuals to burn copies of purchased content for other family members to use.

But sharing files of copyrighted material over the internet is expected to remain illegal.

Mr Cable is also expected to give legal protection to internet spoofs of famous chart hits and movie blockbusters.

Legislation to protect parodies would prevent the kind of legal challenge which forced the makers of YouTube hit Newport State of Mind – which relocated Jay-Z's Empire State of Mind from New York to South Wales – to remove it from the video-sharing site.

Another proposed copyright exception expected to be supported by the Government will make it easier for scientists to mine existing electronic journals to make discoveries.

His move will signal action on an agenda already flagged by the Prime Minister.

Mr Cameron has suggested he wanted to relax copyright laws in Britain to stimulate entrepreneurship.

"The founders of Google have said they could never have started their company in Britain," the Prime Minister said last year.

More details on the overhaul will be disclosed during Mr Cable's speech.